Seagate to pay $300 million settlement for $1.1 billion hard drive sales to Huawei

Seagate Technology Holdings has agreed to pay a $300 million fine in a settlement with US authorities for shipping more than $1.1 billion worth of hard drives to China’s Huawei in violation of US export control laws. US, the Commerce Department said Wednesday.

Seagate sold the units to Huawei between August 2020 and September 2021 despite an August 2020 rule restricting sales of certain foreign items made with American technology to the company. Huawei was placed on the Entity List, a US trade blacklist, in 2019 to reduce sales of US products to the company amid national security and foreign policy concerns.

The sanction represents the latest in a series of actions by Washington to prevent China from using sophisticated technology that could support its military, enable human rights abuses or threaten US security.

Seagate shipped 7.4 million drives to Huawei over about a year after the 2020 rule took effect and became Huawei’s sole supplier of hard drives, the commerce department said.

The other two major hard drive suppliers ceased shipments to Huawei after the new rule went into effect in 2020, the department said. Although they were not identified, Western Digital and Toshiba Corp were the other two, the US Senate commerce committee said in a 2021 report on Seagate.

The companies did not respond to requests for comment.

Even after “their competitors stopped selling to them… Seagate continued to ship hard drives to Huawei,” Matthew Axelrod, assistant secretary for export control at the Commerce Department’s Bureau of Industry and Security, said in a statement. “Today’s action is the consequence.”

Axelrod said the administrative penalty was the largest in the agency’s history not tied to a criminal case.

Seagate’s position was that its foreign-manufactured drives were not subject to US export control regulations, essentially because they were not the direct product of US equipment.

“While we believed we were in compliance with all relevant export control laws at the time we made the subject hard drive sales, we determined that … resolving this matter was the best course of action,” the Seagate CEO said. , Dave Mosley, in a statement. statement.

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